As the Trump administration announced tariffs on EU goods, the luxury goods industry has become anxious. There are concerns that this move will lead to price increases or supply shortages for iconic products such as Louis Vuitton handbags, Chanel classic bags, and Rolex watches. Notably, the US, as the largest consumer market for luxury goods (accounting for 24% market share), will have its demand fluctuations directly impact the overall industry outlook.
The New York Times analysis points out that while luxury brands have high profit margins, if the tariff policies persist, the ultimate costs will be passed on to consumers. For example, the price of Chanel's classic handbags has doubled from 2016 to 2023. Industry data shows that although 70% of luxury goods buyers belong to the affluent class, they are price-sensitive, and economic fluctuations could dampen their purchasing willingness.
Currently, nearly all luxury brands, except Louis Vuitton, rely on European manufacturing and Asian supply chains, making it difficult to establish alternative production capacity in the US in the short term. Analysts believe this may lead more consumers to turn to the second-hand market, with US dealers already beginning to stockpile to avoid future price increases.
Management consulting firm Bain & Company warns that tariffs will further increase the already rising prices of luxury goods, exacerbating negative public perceptions of luxury brands. Claudia D'Arpizio, head of the company's global fashion business, noted "They are at a moment where they need to regain customer trust, so this is not a step in the right direction. There is a widespread negative view in society towards products that only target the super-rich."
Due to the tariff policies, British luxury car brands Jaguar, Range Rover, and Land Rover have restricted shipments to the US.
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